China’s top leadership has mapped out the policy and top tasks for economic development for 2015, and Shanghai investors said they have high hopes for the next fiscal year. The Central Economic Work Conference focused on plotting the course for 2015, the final year in the government’s current five-year plan.
The government pledged to develop a proactive and prudent economic and fiscal policy to hopefully please the market.
The official announcement for the GDP targets is expected early next year. Brokers said they were optimistic that the government will take firm steps to remedy economic fundamentals such as the level of consumer inflation, which has fallen so much it has raised fears of deflation.
“We are quite enthusiastic to see two types of signals coming from the conference. The first one is the target setting, we would expect they would have some economic data setting including the CPI and money supply,” Calvin Tang, vice president of Vantage Capital, said. “We are expecting that the central government is sending another signal again: they’re going to differentiate, defend the deflation problem with huge money supply.”
The stock’s current rally was sparked by the decision to reduce interest rates nearly three weeks ago. And while the government hasn’t promised further rate cuts, market watchers expect more in the new year.
“Maybe a month or two later if overall indicators of the economy are not improving much, as I said, the market will expect that the central bank to lower interest rates,” Shanghai Jiaotong University Professor Jun Qian said. “I actually do think they will actually lower interest rates.”
The People’s Bank of China chose to wait a while before the next rate cut, but it has already moved to increase liquidity and told banks to step up lending and relax loan-to-deposit ratios.
But is this enough to maintain the bullish sentiment we’ve seen in the past fortnight?
“I would not use the word ‘bullish’,” Tang said. “Afterwards we will have a few factors supporting the stock market. Overall if the liquidity is good, energy price is low and we have a lower renminbi, that will be supporting the stock market.”
CCTV America’s Timothy Pope reported this story from Shaghai.
Central Economic Work Conference ends on positive noteChina's top leadership has mapped out the policy and top tasks for economic development for 2015. Shanghai investors said they have high hopes for the next fiscal year.
China lays out economic development goals for 2015
For more insight into signals coming out of the conference, CCTV America talked with Raymond Yeung, the senior economist at ANZ.